MarketLife Ep 32 – Technicals for the non-technician

In this episode, I look at basic technical tools that anyone, regardless of background or previous experience, can use to enhance his or her trading program. Important concepts and tools are covered, along with some ideas for how to expand your learning and learn to do this yourself.

Technicals vs Fundamentals

  • Frequency of data
  • Difference in intent (true value / behavior)
  • Both only address probabilities

Biggest points

  • Consider learning to short
  • How do you size positions?
  • Technical factors force you to deal with the market as it is right now.
  • Be careful of indicators. Many of them measure the same thing.


  • Many ways to measure trend/define trend
    • Three trends
  • Trend depends on timeframe
    • Your timeframe depends on who you are and how you invest
  • What does trend mean?
  • How to use trend?
    • Don’t fade a trend

Overbought / Oversold

  • Rubber band concept
  • Statistically verifiable tendency
  • Stronger on some asset classes (stocks)
  • However, trends get more and more overbought/oversold
  • Some indicators measure this

Price behaving badly

  • Price behavior shows emotion
  • Wide range bars
  • Gaps
    • Why are there gaps?
  • Extended thrusts

Price rejection: where mistakes were made

  • Price “doesn’t want” to be there—quick snap back
  • What does this look like?
    • Tails on candles
    • Up/Down or Down/Up bar pairs with wide range

How to get started?

  • Decide what tools to use and change them slowly
  • Write down prices
  • Chart by hand
  • Do research

The link to the free trading course I mentioned is here .

If you enjoy the podcast, one of the very best things you can do for me is to leave me a review on iTunes here.

Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter.

Enjoy the show:


Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.

This Post Has 3 Comments

  1. Adrian

    Adam, talking about stop losses in this podcast, you say: “I can tell you when I buy something: if it goes here, I know I am wrong, that I will be out of the trade, I am gonna take my loss”. Should I read this ad litteram or we need to apply some ‘art of trading’ [a concept that I strongly oppose] here, too? I mean if you enter long and define your stop loss 2 * ATR below entry, should we treat differently (i) the case when the first day after you enter, you get a big 2 * ATR drop that hits your stop and (ii) the case when you have 5 consecutive 0.4 * ATR drops (so, the same total 2 * ATR drop), 5 orderly decreasing days, the 5th day potentially being in a totally different keltner channel context than the 2*ATR drop day from the previous scenario?

  2. Asiaonthebid

    I like the podcast but was a little surprised at your comment regarding market profile. Market profile and auction market theory are very worthy of study, after all, the markets are an auction, are they not?

    1. Adrian

      I know nothing about the market profile and auction theory, but generally speaking, from my personal perspective, I can say:

      – even if a theory or a way to describe the market is perfectly reasonable, no-nonsense, no BS, no garbage (like Adam would say 🙂 ), what matters for me, and the only way it can be useful for me, is if it has a predictive power, if it can make a correct prediction about the future; of course, it wouldn’t guess the future 100% of times, but it has to give me exploitable edge

      – as good/rational/decent/intuitive an advice/rule/strategy can be, and as much I would agree with that, if I can not verify it worked in the past, it’s useless for me; for instance, many say to not be in a trade before a company earnings release, because anything can happen (up/down gaps), and that’s gambling. I would agree, especially if you are a swing trader, with a holding period of a few days (as opposed to longer term traders). Can I verify this claim? I still have some work to do before having a final answer, but I don’t think I will be able to check this (because I need to find the day in Q1 of 2009 when AAPL released its earnings, and so on for a big enough set of companies and release dates, and I don’t think I can find that info).

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